1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest. This is the standard formula used by banks and financial institutions in Malaysia.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

• \( PMT \) — Monthly payment amount
• \( P \) — Principal loan amount (MYR)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of payments (loan term in months)

Explanation: The formula accounts for compound interest over the life of the loan, calculating the fixed payment needed to pay off the loan completely by the end of the term.

3. Importance of Loan Payment Calculation

Details: Understanding your monthly payment helps with budgeting and financial planning. It allows you to compare different loan offers and choose the most suitable option for your financial situation.

4. Using the Calculator

Tips: Enter the loan amount in MYR, monthly interest rate as a decimal (e.g., 0.005 for 0.5%), and the number of monthly payments. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual rate to monthly rate?
A: Divide the annual rate by 12. For example, 6% annual becomes 0.06/12 = 0.005 monthly.

Q2: Does this include other fees?
A: No, this calculates principal and interest only. Additional fees like processing fees or insurance are not included.

Q3: What's a typical loan term in Malaysia?
A: Personal loans typically range 1-10 years, while mortgages can go up to 35 years.

Q4: How does early repayment affect payments?
A: Early repayment reduces total interest paid but may incur penalties. Contact your bank for specifics.

Q5: What's the difference between flat rate and reducing balance?
A: This calculator uses reducing balance method where interest is calculated on remaining principal each month.